According to market observers heavy selling pressure was witnessed in banking healthcare and automobile stocks.

On Wednesday the barometer 30-scrip Sensitive Index (Sensex) of the BSE receded by 144.52 points or 0.42 per cent to 34 155.95 points from Monday s close. The equity markets were closed on Tuesday.

Similarly the wider Nifty50 of the National Stock Exchange declined by 38.85 points or 0.37 per cent to 10 500.90 points.

In terms of the broader markets the S&P BSE mid-cap index inched up by 0.17 per cent and the small-cap index by 0.16 per cent.

The intra-day trade saw the barometer Sensex touch a high of 34 473.43 points on the back of positive cues from global markets and a low of 34 028.68 points which was led by a massive sell-off in the banking sector stocks.

The BSE market breadth was bullish as 1 368 stocks advanced as against 1 470declines.

"Selling accelerated in the afternoon session led by a drop in PSU banking stocks on the back of news that Punjab National Bank (PNB) had detected a $ 1 771.69 million fraud at a single branch in Mumbai."

"Major Asian markets have closed on a positive note barring the Nikkei and Straits indices. European indices like FTSE 100 DAX and CAC 40 are trading in the green."

The massive-sell off in the banking sector stocks was triggered after the Reserve Bank of India s (RBI) announced new norms to deal with the NPAs on Monday.

"The PSU banks witnessed sell-off as RBI scrapped a number of loan-restructuring schemes which may lead to further jump in provisions impacting profitability of these banks " said Vinod Nair Head of Research Geojit Financial Services.

Besides RBI s latest moves the massive $1.8 billion fraud detected at one of the Mumbai branches of PNB the second largest public sector bank in India also spooked investors.

"PNB fell 9.8 per cent as investors wondered about the impact of the fraud on theprofits or book value of the bank even as they await data about thepossibility and extent of recovery that is possible " Jasani told IANS.

"If no recovery is possible the impact could be Rs.42-46 per share out of which the stock price has already fallen -- Rs 16 today."

On a closing basis the scrip of PNB closed at Rs 145.80 down by Rs 15.85 or 9.81 per cent from its previous close of Rs 161.65.

Apart from PNB stocks of other lenders like Yes Bank State Bank of India Axis Bank and ICICI Bank were also impacted.

On the currency front the Indian rupee strengthened by 22 paise to close at 64.09 against the US dollar from its previous close at 64.31.